The two fallacies of gas Part II – Bridging

Natural gas is often referred to as a bridge to the low-carbon economy. By this it is meant that gas is a mechanism through which tailpipe emissions may be reduced, while maintaining a similar pathway of socioeconomic progress that is dependent on the use of fossil fuels. A convenient prospect for fossil fuel companies and a narrative which is surely attractive to preserve. Nonetheless, embedded within the term bridge is the eventuality of net zero emissions, in which the viability of the use of gas is minimal. This is the second fallacy, adding to that of the concerns about methane leakage rates which I described in my earlier blog.

Benefits

Granted, there are a number of benefits to the use of gas in the short term. Research demonstrates that the proliferation of fracking and the production and use of natural gas in the US has resulted in the country reaching emission reduction targets seven years early. As well as having those climate benefits, gas can play other pivotal roles within the energy system. It can act as a solution for the natural intermittency of renewable energy, particularly on an interseasonal basis. In addition, for many of the industries that are difficult to decarbonise, such as cement and steel, the high temperatures created by fossil fuel combustion can be difficult to recreate with the existing low-carbon technologies.

However, the length of this bridge may not be as long as people expect and as fossil fuel companies promote. It is important to keep in mind during this conversation the bias of fossil fuel companies. They specialise in liquid hydrocarbon extraction and production, for the most part operating in remote and adverse environments. Thus, natural gas is symbiotic to their business model, while renewables are not. Therefore, we can assume that their predictions for the role that natural gas might play in the energy system might be somewhat inflated.

Developments

The two most important developments that unsettle these forecasts is progress in technology and regulation. On the technology front, experience curves for solar and wind are rapidly lowering the levelised cost of electricity and outcompeting coal and gas in auctions. Even when coupled with batteries, they compete on a cost basis. Other technologies such as hydrolysis of water or liquid air storage are emerging as possible solutions for managing the supply of renewable energy over longer time periods. The deployment of technologies such as the electric arc furnace are other possible decarbonisation strategies that circumvent the use of fossil fuels.

The – almost – global consensus of the 2015 Paris Agreement to mitigate global warming to below 2°C has caused a magnification of climate policies. Research from the Grantham Research Institute for Climate Change and the Environment indicates that 106 new climate change-related laws and policies have been implemented since the agreement. To reach the Nationally Determined Contributions of the agreement, many countries will have to rapidly decarbonise. In the UK, there seems little scope for the use of gas within the existing carbon reduction targets that go beyond 2030, in the absence of carbon capture and storage (CCS). Carbon taxes and other financial mechanisms have a significant role to play, and again, depending on the price employed, make natural gas an unattractive investment.

The misconceptions of natural gas weigh in the favour of fossil fuel companies. The diversion of attention to this energy source allows them to focus on their operations while proclaiming the environmental merits of these actions. However, this allows them to ignore the existential question of their long-term role in the economy. But, those, like myself, with less optimism about the prospects of CCS, ought to question the feasibility of this decarbonisation strategy.

Nicholas Spooner

Sector lead: Utilities

Nick Spooner is an engagement associate supporting the operations of Hermes EOS primarily in the US. He has a particular focus on climate change and the engagement with those sectors that are most affected by it, including energy, agriculture, financial and automotive. Nick joined the team following the completion of his MSc in Climate Change, Management and Finance at Imperial College London. During his Master’s degree he also carried out an internship within the Hermes EOS team, where he produced a report analysing the implications of the recommendations of the Task Force on Climate-related Financial Disclosures recommendations for the financial sector. Previously, he worked as a sustainability consultant in the real estate sector.